Personal Financial Management - Speech or Presentation Example

Test Optional Extra Credit Due 3/4 Rule: Complete the following 4 problems. Each one is worth 22.5 points and the total is 90 points.If the score of this optional extra credit is higher than your original test 1 score, then it will be used as your new Test 1 score.Problems: 1. Use future value and present value calculations (see tables in Appendix A) to determine the following:a. The future value of a $700 savings deposit after eight years at an annual interest rate of 3 percent. $700 x 1.267 = $886.90 b. The future value of saving $2,500 a year for five years at an annual interest rate of 4 percent.

$2,500 x 5.416 = $13,540 c. The present value of a $2,000 savings account that will earn 3 percent interest for four years. $2,000 x 0.885 = $1,770 2. Use the following items to prepare a balance sheet and a cash flow statement for Helen Meyer. Determine her total assets, total liabilities, net worth, total cash inflows, total cash outflows, and cash surplus (or deficit).Rent for the month, $550Monthly take-home salary, $2,750Cash in checking account, $400Savings account balance, $1,570Spending for food, $350Balance of educational loan, $1,270Current value of automobile, $6,500Telephone bill paid for month, $70Credit card balance, $275Loan payment, $110Auto insurance, $210Household possessions, $2,975Stereo equipment, $1,150Payment for electricity, $125Lunches/parking at work, $175Donations to church, $75Home computer, $1,250Value of stock investment, $750Clothing purchase, $120Restaurant spending, $90Balance Sheet of Helen Meyer as of XXXXAssetsLiquid AssetsCash in checking account $400Savings account balance $1,570Total Liquid Assets $1,970Personal PossessionsCurrent value of automobile $6,500Stereo equipment $1,150Home computer $1,250Household possessions $2,975Total household assets $11,875Investment AssetsValue of stock investment $750Total investment assets $750Total assets $14,595LiabilitiesCurrent LiabilitiesCredit card balance $275Total current liabilities $275Long-Term LiabilitiesBalance of educational loan $1,270Total long-term liabilities $1,270Total liabilities $1,545Net worth $13,050 Cash Flow StatementCash InflowMonthly take-home salary $2,750 x 12 $33,000Total cash inflow $33,000Cash OutflowRent for the month $550 x 12 $6,600Spending for food $350Lunches/parking at work $175Clothing purchase $120Telephone bill paid for month $70 x 12 $840Loan payment $110Payment for electricity $125Donations to church $75Restaurant spending $90Total cash outflows $8,485Cash surplus $24,5153.

Carla Lopez needs to manage her financial plans. You, as a financial planner, are asked for the advice. a. She deposits $3,000 a year into her retirement account. If these funds have an average earning of 8 percent over the 40 years until her retirement, what will be the value of her retirement account? $3,000 x 259.06 = $777,180b. She currently earns $50,000 a year and is offered a job in another city for $56,000. The city she will move to has 8 percent higher living expenses than her current city.

What quantitative analysis should she consider before taking the new position? Current Salary: $50,000Minimum Expected Salary: $50,000 x (1+8%) = $54,000Offered Salary: $56,000 > $54,000 => She should accept the offer.c. She has liquid assets of $2,680 and current liabilities of $2,436. What is her current ratio? What comments do you have about this financial position? Current Assets: $2,680Current Liabilities: $2,436Current Ratio: Current Assets / Current Liabilities = 2,680/2,436 = 1.10As the value of the current ratio is greater than 1.

0 therefore it can be stated that she has a good liquidity position as she has sufficient liquid assets to pay off her current liabilities if they fall due in the short term. 4. Wilbur has gathered the following information for his current tax year.Earning from wages $52,175Interest earned on savings $210IRA deduction $2,570Checking account interest $55 Four exemptions $3,500 eachCurrent standard deductions for filing status $9,000Amount withheld for federal income tax $3,420Tax credit for childcare $450Filing status married filing jointlya.

What is Wilbur’s taxable income? (Refer to Exhibit 4-1, p. 108) Adjusted Gross IncomeEarning from wages $52,175Interest earned on savings $210Checking account interest $55 ________ $52,440Less: Adjustment to IncomeIRA deduction $(2,570)Amount withheld for federal $(3,420)income tax ________Adjusted Gross Income $46,450Less: Itemized Exemptions and $(14,000)Deductions ($3,500x4)Less: Standard Exemptions and $(9,000)Deductions ________Taxable Income $23,450 b.

What is his total tax liability? (Use Exhibit 4-7, p. 122) What is his average tax rate? Taxable Income $23,450$0-$14,320 @ 10% $1,432$14,320-$23,450 @ 15% $1,370Total Tax Liability $2,802Less: Childcare Credit $(450)Net Tax Liability $2,352Average Tax Rate: Total Tax Liability / Taxable Income: $2,352/$23,450 = 10.03% c. Based on his withholding, will Wilbur receive a refund or owe additional tax? What is the amount? Since, the tax liability is less than the withheld amount therefore a refund will be made.